Based at the Dubai International Airport, Emirates has grown to be the leading airline company in the Middle East and Asia. The airline has approximately 10,000 flights in a month covering major routes and cities of the world. By 2010, Emirates Airlines flights covered 74 nations mainly in the Middle East, Asia, Europe, North and South America, Africa, and Australia (Horth, 2005). Other than this, the airline also operates flights in four of the main ten longest flights in the world. These flights include:
- Dubai to Los Angeles
- Dubai to San Francisco
- Dubai to Dallas
- Dubai to Houston
The airline commenced its operations in 1985 as a government project after Gulf Air reduced its flight operations in Dubai. Despite the fact that the incorporation and development of the airline was a government initiative, the government wanted the airline to be an independent body (Horth, 2005). During its early days of operations, the airline received a lot of support from the royal family of Dubai. For instance, the royal air wing provided the airline with two aeroplanes that acted as the first fleet of the airline. Additionally, the operations of the airline were headed by Ahmed bin Saeed Al Maktoum. Maktoum is the current chairperson of the airline.
Due to effective management, the airline’s operations grew in the years that followed its incorporation. Emirates increased the size of its fleet as well as its destinations. Consequently, the airline also increased its employee base to cater for the increased needs and demands of running the airline in an effective and efficient manner. By 2008, the airline had an employee base of over 50,000 individuals all over the world. To sustain its operations, the airline moved its operations to Terminal 3 of the Dubai International Airport since 2008 (Clark, 2010). This was a strategic move proposed by the managed to cater for the increased needs of the airline and to support the growth and expansion of its activities in the coming years.
Nature of Operations
Emirates Airlines is a subsidiary of the Emirates Group. The Emirates group, on the other hand, is a subsidiary of the Investment Corporation of Dubai (ICD) (Clark, 2010). ICD is the official investment corporation of the Dubai government. In the year 2011, the Emirates Group had an annual turnover of $12 billion. The entity has several subsidiary companies operating under its umbrella in different sectors of the economy such as:
- Tour Operations
- Aviation and engineering
- Airline catering services
- Aircraft ground handling
Thus, Emirates Airlines is just but one of its wings of operations. However, due to its strategic management practices, Emirates Airlines has developed to become one of the leading airline companies not only in the Middle East but also in the world.
The world is currently experiencing a lot of advancement in the field of science and technology. These advancements have led to the growth and development of all economic sectors due to the increase in demand for the goods and services offered, changes in tastes and preferences of consumers and the availability of disposable income by the consumers. The airline industry, for instance, has benefited a lot from this phenomenon. The increased number of passengers over the years has led to increased demand for air services. However, just like in any economic industry, the level of competition in the airline industry has also increased over the years. Thus, Emirates Airlines has always been facing stiff competition from airline operators such as Qatar Airlines, Continental Airlines, British Airways, and Singapore Airlines. Thus, to overcome the stiff competition from the key players in the airline industry, Emirates Airlines has always been on the forefront of conducting research to determine the needs of its target market and means through which it can deliver effective services that match up to them.
The fleet of Emirates Airlines comprises of Airbus and Boeing planes. This choice of aircraft has made the airline to have a high reputation since it is among the few airlines that operate large-bodied aircraft in the airline industry (Regan, 2009). Boeing 777 is the main aircraft of the airline. The choice of this plane came about due to its effective consumption of fuel, ability to travel long distances and its large passenger and cargo capacity. On the other hand, the airline most preferred Airbus aircraft is the A380. In 2008 for instance, the company ordered over 90 A380 aircraft (Regan, 2009). However, only 20 of the planes were delivered in that year. From this analysis, it is evident that Emirates Airlines prefers to maintain its operations with the use of huge aircraft that are capable of handling almost all types of customers. With the presence of different classes within a single aircraft, the airline is capable of transporting customers with different financial capabilities under one flight. This reduces the operating expenses that the company faces in maintaining its services; a move that enables the airline to stand at a competitive edge over its rivals. To fully sustain its operations and ensure that all its routes operate effectively and efficiently, Emirates Airlines has constantly been increasing the number of aircraft in its fleet. In 2007 for example, the airline bought 130 new planes (Regan, 2009). This was the highest number of planes purchased by a single airline company during that year.
In terms of revenue earned, a number of passengers, fleet size and distance travelled, Emirates Airlines is the leading airline company that is based in the Middle East. To achieve this, the company always offers high-quality services to its customers. The airline has competent employees who work hard to meet the needs and expectations of its customers. It is perhaps due to this fact that the airline was the 4th largest airline in the year 2007 to transport international passengers in the world (Regan, 2009). As a result of all these factors, the airline has developed a strong brand name. Emirates Airline has always exhibited positive growth since its incorporation in 1985. The airline has also maintained a high level of excellence in the services that it offers to its customers. Emirates Airlines has been profitable over the years despite the harsh economic times that the world is facing. In 2011, the Emirates Airlines won the Airline of the Year award. Amongst other factors that form part of the excellence that the airline is attributed to, the fact that it has been profitable for over 22 straight years played a critical role in the airline winning this award. All these factors play a critical role in developing a strong brand name of the company, a factor that ensures that it commands a large market share hence standing at a competitive edge over its rivals. This has guaranteed its profitability and sustainability in the short run and in the long run.
Major Department of the Airline
Organizational structure is a framework that an organization uses to run its operations (Wether and Chandler, 2006). It entails the ways and means through which an organization arranges its authority lines, communication, roles, duties and responsibilities of individuals and departments and how all these are incorporated into a single unit. The table below shows an example of an organization structure (Fontaine, 2007). Different organizations choose different organizational structures. The choice of an organization structure depends on the goals and objectives that an organization wants to achieve in the short run and in the long run. Generally, there are two forms of organization structures. There is a centralized form of organization structure and a decentralized form of organization structure (Sign, 2009). In the centralized organization structure, all the power of the organization is concentrated at the top managerial levels. Due to the amount of power they have, the top management level exercises tight control over the affair of all the divisions or the departments that constitute the organization. On the other hand, power in the decentralized organization structure is distributed among all the departments or divisions of the organization who work in unity to achieve the goals and objectives of the firm.
Emirates Airlines has adopted a decentralized form of organization structure. The choice of this structure was driven by the ease at which it facilitates communication and enhances the decision making the process of the airline given its vast size, its diversity and the huge workforce that it has. However, it is essential to note that the management is responsible for making key decisions that affect the overall running of the organization. These decisions usually have the views and ideologies of all employees within the airline as their attitudes and perception towards their impacts are usually sought before the final decision is arrived at.
The decentralized mode of organization structure that Emirates Airlines has is also effective in the management of its operations. To support its operations, the structure of the airline comprises of several departments. Each department has specific goals and objectives that it has to achieve. These goals and objectives are always in line with the overall strategic plan, mission, and vision of the airline. Thus, it is essential that these departments operate in a systematic manner to ensure that maximum efficiency is achieved.
The major department of Emirates Airline is its cargo wing. The division operates under its brand name, Emirates SkyCargo. This division has been operational since 1985 when the airline commenced its operations. The division is responsible for cargo flights for the airline. Currently, Emirates SkyCargo is operational is 15 countries all over the world with Dubai International Airport being the hub of its operations. The division has over 75 destinations worldwide. To meet the demand of its activities, the department has a workforce of over 40,000 employees. This constitutes to over 85% of the total workforce of the airline (Knoor and Eisenkopf, n.d.).
Due to the increased demand for its services and the growth of the department, SkyCargo moved its operations in 2008 to the Cargo Mega Terminal at Dubai International Airport. Being a 469,000 sq. feet in size, the terminal has the capacity of supporting the transportation of 1.2 million tonnes of cargo in a single year (Knoor and Eisenkopf, n.d.). For instance, during the 2008/2009 financial year, SkyCargo transported over 1.5 million tonnes of cargo from this terminus alone. According to statistics, this was an increase of about 10% as compared to the previous year’s figures. Evidently, this is a clear indication of positive growth in the activities and operations of the division constituting over 20% of the annual revenue that Emirates Airline earns as a whole (Knoor and Eisenkopf, n.d.).
To support its services, the division operates under passenger fleets as well as cargo aircrafts. The division mainly operates under Boeing 747-400 and 747-100 that are capable of carrying 120 tonnes and 110 tonnes of cargo respectively. These aircrafts are huge, fuel efficient, fast and capable of taking long flights as compared to A310 or any other huge aircraft (Knoor and Eisenkopf, n.d.). As a result, the efficiency of the division has increased due to its minimal costs of operations, high levels of flight turnovers and maintenance of high quality services. By the close of the 2006/2007 financial year, the division announced that it had a profit of over $1 billion (Knoor and Eisenkopf, n.d.). Due to the level of growth that the division has been experiencing from the recent past and an increase in its efficiency of operations, its profitability is projected to increase within the coming years.
SkyCargo has also been involved in several agreements to sustain its operations. For instance, the division entered into an agreement with the United States in 1993. In accordance with this agreement, SkyCargo is expected to handle all cargo shipments of the United States of America to all the destinations within the US as well as in Europe, Australia, the Middle East, Asia Pacific, Africa and South America. This agreement had a huge impact on the operation of the division enabling it to earn a lot of revenue as well as a huge market share in the cargo transportation industry in the world. In addition to the original routes that were included in this agreement, the division has been increasing the number of destinations that it covers under this term. In 1997, the division added Amsterdam as one of its key destinations under this agreement. In 2004, the division introduced the Johannesburg route as well as the Lahore route in its operations. Many other destinations have been added in the recent past. This has greatly boosted the operations of the division hence increasing the impact that it has on Emirates Airlines and the Emirates Group as a whole.
Department of Operations
The airline also has other departments of operations. The airline has an airport aviation department that specifically deals with ground and passenger handling services of the airline. The main aim of this department is to ensure that passengers as well as their cargo are handled with care. It has been a common practice for airline mix up to occur in airports. At the same time, the cargo and passenger luggage have always been misplaced, mixed up or lost during normal flight operations. It is thus the main role of this division to ensure that these problems do not occur within the airline. Due to its efficiencies, other airlines have outsourced this service to the department in Dubai International Airport. This includes airlines such as British Airways, United Airlines, Swissair and so on.
The engineering division is also another essential component of Emirates Airlines. This division is responsible for maintaining the fleet of the airline. Emirates Airlines has always strived to be a leader in the airline industry. To achieve this, it has to ensure that all its aircrafts are well serviced and maintained. This mandate falls under the jurisdiction of its engineering division. Through its fleet management practices, the engineering division provides extensive support and maintenance services to its Boeing and Airbus aircrafts. As a result, all of the airlines aircrafts are always safe and well maintained. Despite the huge maintenance costs that the airline incurs in achieving this level of excellence, the high quality services that it offers coupled with its reliability and sustainability play a critical role in boosting its profitability and sustainability in the short run and in the long run. Just like its airport aviation services, the engineering department has been subcontracted by third party airlines within the Dubai International Airport. To sustain its services therefore, the division has a 0.55 km² test facility within the Dubai International Airport. This facility has state of the art machinery and equipments that are required to offer high quality maintenance services. The division also comprises of a highly qualified and experienced team of employees who work hard to achieve and maintain the excellence that the division hence the airline is accredited with.
The catering and cabin operations division also plays a significant role in sustaining the operations of the airlines and ensuring that its customers receive high quality services during their flights. The division has approximately 5,400 highly qualified employees who offer catering and cabin crew services for the airline as well as third party airlines that operate at Dubai International Airport.
The IT division also plays a critical role in the maintenance of the operations of the firm. Through research and development, this division has come up with procedures and practices that enhance the operations of the department and the airline as a whole. Emirates Airlines has incorporated the use of IT and ICT in its operations. These operations are run and maintained by the IT department. Developing a strategic IT plan is one of the effective means through which a firm can achieve competitive advantage (Sprague, 2000). An effective IT plan acts as a leverage that aligns the technological resources of an organization with its strategies, goals and objectives (McLeod, 2007). This ensures that a firm operates in an effective and efficient manner hence being sustainable both in the short run and in the long run. With the help of the IT department, the airline has developed internal and external services that enhance the experiences of both the employees of the airline as well as its customers. For instance, the management can easily track the performance of its employees, market its services and engage with its clients. Consequently, customers are capable of booking and managing their flights from via the internet from anywhere in the world. IT has also enables effective flight, cargo, and luggage management of the airline. This has greatly increased the effectiveness of the airline’s operations making it to be reliable, sustainable and profitable.
Problems Faced in Operations
In the normal course of operations of any organization, problems are inevitable. Being is an international airline company, the problems and challenges that Emirates Airline faces can originate from within or outside the UAE. One of the major challenges that the airline suffered came about as a result of the 2008-2010 global financial crisis (Wensveen, 2010). Due to this crisis, the economies of most nations reduced hence affecting the disposable income of potential customers of the airline. As a result, the demand for air travel reduced. During this time, Emirates Airlines recorded the lowest number of flights with reduced seat bookings within its airline. This greatly reduced the amount of revenue earned during the period.
At the same time, the airline suffered another challenge, the increase in oil prices. The demand for oil and other petroleum products has been increasing in the world as a result of massive industrialization and globalization. The fluctuation in oil prices has greatly increased the operating costs of the airline. At the same time, the airline in incapable of making sustainable decisions due to the fluctuating nature of oil prices.
Finally, the airline has been facing stiff competition from local and international airline companies. As a result, this pressure has brought about a battle of air prices among airlines internationally. As more and more companies enter into the airline industries and current airlines expand their services, competition has forced Emirates Airlines to drastically reduce its freight charges despite the fact that its operating costs have been increasing over the years. This has greatly reduced its profitably and the expansion of its services (HubPages, 2011).
Despite the fact that the airline market shrunk during the 2008-2010 global financial crisis, the management of Emirates Airline came up with strategic plans and decisions that ensured that the operations of the airline should be sustainable and profitable. First, the airline maintained its gulf operations despite the fact that many airlines reduced their flights to the gulf region as a move to reduce their operating expenses (Flattau, 2012). This move ensured that the airline maintained a huge market share within the UAE. At the same time, the airline maintained its brand reputation by offering high quality services that it is renowned for. For instance, the airline maintained its flight schedules and comfort standards in all its flight classes during these tough times. This not only ensured that the airline maintained its customers but it also built a strong brand name.
To combat the rising prices of fuel, the airline made a decision of buying A380 aircrafts. These aircrafts are fuel-efficient, have a huge passenger capacity, and are capable of undertaking long flights. These aircrafts greatly reduced the operating costs of the airline during the economic crisis period of 2008-2010. With reduced costs, the airline was in a position to adjust its freight prices to meet the price ranges of its customers. As a result of its effective pricing mechanism, the airline was capable of maintaining its customers as well as attracting customers from other airlines. This move further increased its market share within the UAE and the world at large. As a result, the airline has always been at a competitive edge over its rivals over the years.
From its humble beginnings in 1985, Emirates Airlines has grown to be one of the leading airlines in the world. Through effective management practices, the airline has been capable of expanding its operations as a move of increasing its market share over time. The airline has thus been profitable and sustainable over the years making it to be one of the most successful companies in the UAE.
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